Compensating Variation Is

Multiple Choice

Compensating variation is:

A) the change in income necessary to hold the consumer at the final level of utility as price changes.
B) always the area under the demand curve and above the price paid.
C) the change in income necessary to restore the consumer to the initial level of utility.
D) the difference in the consumer's income between the purchase of the original basket and the new basket at the old prices.